Impact of War in Iran on Bitumen Prices and Road Construction in Nepal: ‘We Are in a Construction Hold’
Image source, RSS
Due to ongoing tensions between Iran and Israel-America, Nepali construction entrepreneurs, demanding contract price adjustments, have stated that the construction sector is currently on hold.
Before the onset of the Iran war, the price of bitumen, essential for road blacktopping, was around NPR 75 per kg, but now it has more than doubled, according to industry insiders. Additionally, diesel and petrol prices have surged by over NPR 90 per liter.
Sahadev Khadka, Vice President of the Nepal Construction Entrepreneurs Association, told BBC that primarily, only a negligible quantity of bitumen is being imported from India, and even that is difficult to procure.
Bitumen is a dense and viscous hydrocarbon derived during petroleum refining and is widely used for road blacktopping.
“Under normal circumstances, Nepal used to receive at least 2,000 tons of bitumen daily, but now barely 100 tons make it into the country,” said Khadka.
“With diesel prices rising by over NPR 90, the ripple effect has impacted various sectors including transportation,” he added.
Khadka also highlighted that there are multiple operational challenges and material shortages currently faced across the sector.
The spokesperson for the Ministry of Infrastructure Development reported a slowdown and even halting of road construction projects nationwide in several locations.
Spokesperson Ramhari Pokharel said to BBC: “Due to price hikes, progress has significantly decelerated. There is some work progressing, but hardly any tangible advancement.”
Officials noted that this impact is evident from major national pride projects to existing primary highways, where delays had already been common.
Nationwide Impact
Pokharel further explained that road blacktopping work has been severely affected across the country, leading to a considerable slowdown compared to normal conditions.
“A study committee led by a member of the National Planning Commission is currently reviewing how to address this issue. They have been asked to submit recommendations within two weeks,” said Pokharel.
“This problem is no longer limited to the construction sector but, if prolonged, could impact the entire economy. Dependent industries and workers are likely to be affected.”
He identified the shortages of fuel and bitumen as the gravest issues.
“Cement prices have also risen steeply. With increased transportation costs, the consequences are visible nationwide,” Pokharel added.
“The months of Falgun, Chaitra, Baishakh, and Jestha are optimal for road blacktopping, but work during this period has been severely impacted.”
Image source, RSS
Vice President Sahadev Khadka clarified that while the road sector is most profoundly impacted, areas like machinery walls, bridge construction, gabion, and concreting have not suffered as much as road blacktopping.
He added that water pipeline expansion projects are also at a standstill due to material shortages.
“Although cement and rod prices have increased in building construction, work has not stopped,” Khadka said.
Near Standstill Situation
Bitumen arriving from Gulf countries to India has reportedly been reduced by four to five times.
As a result, India’s goal of blacktopping 100 kilometers of road daily has also been affected. India imports over one-third of its bitumen from Gulf countries.
Supporting the Nepal Construction Entrepreneurs Association’s concerns, the Nepal Chamber of Commerce has also issued a statement.
The statement acknowledges that unexpected and significant price hikes have disrupted supply chains, crippling the construction industry and negatively impacting the overall economy.
Image source, RSS
The statement mentions that due to steep rises in diesel, furnace oil, bitumen, construction materials, transportation expenses, and labor costs, the construction industry is on the brink of collapse.
The association has urged the government to establish price adjustment mechanisms for all types of contracts.
Khadka stated: “Despite price increases, materials used in other infrastructure projects can be locally procured. However, due to the shortage of bitumen and diesel necessary for road blacktopping, only about two-thirds of such work is currently progressing.”
He further said that in road and water supply projects, whether by choice or necessity, construction is clearly at a halt.
“The impact on these two sectors is not only difficult to endure but also hard to sustain,” Khadka added.
Entrepreneurs warn that India has been adjusting prices in line with increases in fuel and construction materials, and excluding Nepali entrepreneurs from similar adjustments could automatically bring all construction projects across Nepal to a halt.
According to Khadka, “If this issue is not properly resolved, bank investments may also be affected. Contractors unable to receive work may struggle to pay installments. The government needs to handle this sensitively.”
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